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How to expense and amortize start-up costs or organizational expenditures

SOLVEDby IntuitLacerte Tax209Updated July 12, 2022

Start-up costs are typically capitalized or amortized over 15 years.  However, up to $5,000 of these expenses are eligible to be expensed as a deduction.  The remainder is amortized over 15 years.  This deduction is phased out dollar for dollar for costs over $50,000. 

Follow these steps to enter start-up costs or organizational expenditures:

  1.  Go to the Depreciation (4562) input screen.
  2. In the Asset list on the left side of the screen, click Add.
  3. On this new asset, in Description of Property enter a description for the amortization expense.
  4. In Form (Ctrl+T), select the form to which the asset relates.
  5. In Category select Amortization.
  6. In Date Placed in Service, enter the date the amortizable expense occurred.
  7. In Cost or Basis, enter the expense amount.
  8. In Method, enter 91 to select the Straight Line method.
  9. In Life or class life (recovery period automatic), enter 15, or any other required life.
  10. In Amortization code section, select the applicable code: (i.e.) Sec. 195 for Business Start-Up Expenditures.
  11. In Basis Reduction (Amortizable costs expensed, ITC, etc.) enter the amount (up to $5,000) for first year startup costs. 

Note: Startup costs and organizational expenditures aren't automatically included in ending accumulated amortization on the balance sheet.

To include these costs on the balance sheet:

  1. Go to the Balance Sheet screen.
  2. Enter the expenditure amount in the Intangible Assets* field under the Ending column.
  3. Enter the same expenditure amount in the Less Accumulated Amortization* field under the Ending column.
  4. Select the Forms tab and view Schedule L of the main form. The two amounts will offset each other on the Balance Sheet.

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